Winchester boss sold shares days before losses warning

The chief executive of the film group Winchester Entertainment was at the centre of a share trading controversy yesterday when the company issued a calamitous profits warning just 10 days after he sold shares worth £592,000.

Gary Smith insisted he had done nothing wrong and did not know of the coming warning when he sold the shares to fund renovation work on a £1m house in Birmingham he bought 18 months ago.

Winchester shares collapsed on the warning, falling 63 per cent to 51.5p each. The company is now expected to record a loss of £1.6m for the current financial year. This compares with previous analyst forecasts of a £4.5m profit.

The shortfall is due largely to a one-off write down of £2m on the value of a children's television series called Snow Children. Other problems include the delay of two films where the revenue may not now arrive until the next financial year.

Mr Smith defended his share sale. He said: "I'm not some bozo criminal who is going to do that sort of thing [insider trading]. I'm embarrassed by it, certainly, but I've got a clear conscience.

"I've been in public company life for 15 years and I'm not going to jeopardise all that. I am a market believer and I'll abide by the market rules."

It is understood that Mr Smith has contacted the London Stock Exchange and the Financial Services Authority over the matter and will visit them in the next few days.

Mr Smith sold 400,000 Winchester shares at 148p a share on 23 January with the board's approval. After that the head of the group's film division attended the Naptie children's television festival while Mr Smith went to Los Angeles to negotiate film deals. It later emerged that Snow Children achieved no sales at the festival.